diff --git a/src/core/ext/filters/client_channel/lb_policy/pick_first/pick_first.cc b/src/core/ext/filters/client_channel/lb_policy/pick_first/pick_first.cc
index a0b83d78683..e3de151eff6 100644
--- a/src/core/ext/filters/client_channel/lb_policy/pick_first/pick_first.cc
+++ b/src/core/ext/filters/client_channel/lb_policy/pick_first/pick_first.cc
@@ -377,9 +377,9 @@ void PickFirst::PickFirstSubchannelData::ProcessConnectivityChangeLocked(
   //    for a subchannel in p->latest_pending_subchannel_list_.  The
   //    goal here is to find a subchannel from the update that we can
   //    select in place of the current one.
-  subchannel_list()->set_in_transient_failure(false);
   switch (connectivity_state) {
     case GRPC_CHANNEL_READY: {
+      subchannel_list()->set_in_transient_failure(false);
       ProcessUnselectedReadyLocked();
       break;
     }
@@ -428,8 +428,10 @@ void PickFirst::PickFirstSubchannelData::ProcessConnectivityChangeLocked(
     }
     case GRPC_CHANNEL_CONNECTING:
     case GRPC_CHANNEL_IDLE: {
-      // Only update connectivity state in case 1.
-      if (subchannel_list() == p->subchannel_list_.get()) {
+      // Only update connectivity state in case 1, and only if we're not
+      // already in TRANSIENT_FAILURE.
+      if (subchannel_list() == p->subchannel_list_.get() &&
+          !subchannel_list()->in_transient_failure()) {
         p->channel_control_helper()->UpdateState(
             GRPC_CHANNEL_CONNECTING, absl::Status(),
             absl::make_unique<QueuePicker>(
diff --git a/test/cpp/end2end/client_lb_end2end_test.cc b/test/cpp/end2end/client_lb_end2end_test.cc
index 8c0bf224f72..9bb3005df44 100644
--- a/test/cpp/end2end/client_lb_end2end_test.cc
+++ b/test/cpp/end2end/client_lb_end2end_test.cc
@@ -1,20 +1,16 @@
-/*
- *
- * Copyright 2016 gRPC authors.
- *
- * Licensed under the Apache License, Version 2.0 (the "License");
- * you may not use this file except in compliance with the License.
- * You may obtain a copy of the License at
- *
- *     http://www.apache.org/licenses/LICENSE-2.0
- *
- * Unless required by applicable law or agreed to in writing, software
- * distributed under the License is distributed on an "AS IS" BASIS,
- * WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
- * See the License for the specific language governing permissions and
- * limitations under the License.
- *
- */
+// Copyright 2016 gRPC authors.
+//
+// Licensed under the Apache License, Version 2.0 (the "License");
+// you may not use this file except in compliance with the License.
+// You may obtain a copy of the License at
+//
+//     http://www.apache.org/licenses/LICENSE-2.0
+//
+// Unless required by applicable law or agreed to in writing, software
+// distributed under the License is distributed on an "AS IS" BASIS,
+// WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+// See the License for the specific language governing permissions and
+// limitations under the License.
 
 #include <algorithm>
 #include <memory>
@@ -1079,6 +1075,34 @@ TEST_F(ClientLbEnd2endTest, PickFirstStaysIdleUponEmptyUpdate) {
   EXPECT_EQ(channel->GetState(false), GRPC_CHANNEL_READY);
 }
 
+TEST_F(ClientLbEnd2endTest,
+       PickFirstStaysTransientFailureOnFailedConnectionAttemptUntilReady) {
+  // Allocate 3 ports, with no servers running.
+  std::vector<int> ports = {grpc_pick_unused_port_or_die(),
+                            grpc_pick_unused_port_or_die(),
+                            grpc_pick_unused_port_or_die()};
+  // Create channel with a 1-second backoff.
+  ChannelArguments args;
+  args.SetInt(GRPC_ARG_INITIAL_RECONNECT_BACKOFF_MS,
+              1000 * grpc_test_slowdown_factor());
+  auto response_generator = BuildResolverResponseGenerator();
+  auto channel = BuildChannel("", response_generator, args);
+  auto stub = BuildStub(channel);
+  response_generator.SetNextResolution(ports);
+  EXPECT_EQ(GRPC_CHANNEL_IDLE, channel->GetState(false));
+  // Send an RPC, which should fail.
+  CheckRpcSendFailure(stub);
+  // Channel should be in TRANSIENT_FAILURE.
+  EXPECT_EQ(GRPC_CHANNEL_TRANSIENT_FAILURE, channel->GetState(false));
+  // Now start a server on the last port.
+  StartServers(1, {ports.back()});
+  // Channel should remain in TRANSIENT_FAILURE until it transitions to READY.
+  EXPECT_TRUE(channel->WaitForStateChange(GRPC_CHANNEL_TRANSIENT_FAILURE,
+                                          grpc_timeout_seconds_to_deadline(4)));
+  EXPECT_EQ(GRPC_CHANNEL_READY, channel->GetState(false));
+  CheckRpcSendOk(stub, DEBUG_LOCATION);
+}
+
 TEST_F(ClientLbEnd2endTest, RoundRobin) {
   // Start servers and send one RPC per server.
   const int kNumServers = 3;